CMA Rules: Foreign Investors Can Own Up to 49% in Saudi Firms

The Saudi Capital Market Authority (CMA) has published clear new rules for foreign participation in Saudi-listed companies. Under the updated framework, all non-Saudi investors together can own up to 49% of the shares in any listed company. The reforms aim to attract international capital while protecting market stability — an important development for expatriates, foreign asset managers and international businesses with exposure to the Kingdom.

What the main limits mean

• 49% combined foreign cap: The total stake held by all foreign investors (individuals and institutions) in a listed company cannot exceed 49%.
• 10% single non-resident cap: Any single non-resident foreign investor may hold no more than 10% of a listed company’s shares. This rule reduces concentration risk and prevents any single foreign entity from exercising outsized control.
• Strategic investor exemption: Strategic foreign investors are exempt from the 49% cap if they meet specific criteria and commit to holding their stake for at least two years. This is intended to encourage long-term, active investors rather than short-term financial players.
• Debt-to-equity restrictions: Conversion of debt or debt instruments into shares is restricted: it is permitted only for approved investors or as part of regulated swap deals handled by licensed institutions.
• Transparency: The CMA now requires periodic public reporting of foreign ownership statistics for listed companies to enhance market transparency.

Who can invest? (Eligible categories)

Foreign participation is allowed under defined categories. These include:

1. Qualified Foreign Investors (QFIs) — Legal entities such as companies, funds or institutional investors that meet CMA qualification standards (see criteria below).
2. Strategic Foreign Investors — Entities seeking significant, long-term stakes with operational or growth-focused involvement, subject to a minimum two-year holding period for the exemption.
3. Beneficiaries of swap deals conducted through CMA-licensed institutions.
4. Clients of CMA-licensed asset management firms.
5. Residents of GCC countries (Gulf Cooperation Council), who retain expanded rights under regional arrangements.
6. Former residents of Saudi Arabia or the GCC who maintain an active investment account in the Kingdom.

Qualified Foreign Investor (QFI) criteria

To qualify as a QFI, the investor must be a legal entity with sufficient financial strength. The CMA has set an asset threshold of approximately SAR 1.875 billion (about USD 500 million) for most applicants. Exceptions are available for certain public-sector or government-linked entities such as pension funds, endowment funds, sovereign wealth funds and similar institutions.

QFIs benefit from a clearer, regulated pathway into Saudi capital markets, but they must comply with licensing, reporting and market conduct rules enforced by the CMA.

How swap deals are regulated

Swap deals — a common mechanism allowing foreign investors to gain exposure to shares through local licensed institutions — are subject to strict safeguards. Licensed institutions handling swap deals must:

• Keep client money and assets segregated from the institution’s proprietary holdings;
• Fully cover all transactions to ensure assets used in swaps are secured;
• Control voting rights associated with swapped shares as required by the rules;
• Comply rigorously with anti-money laundering (AML) and know-your-customer (KYC) regulations.

These measures are designed to protect both the integrity of Saudi markets and the interests of local investors while enabling foreign participation through regulated channels.

Exemptions and CMA discretion

The CMA retains the authority to grant case-by-case exemptions where justified. Strategic investors seeking relief from the 49% cap will need to meet the CMA’s requirements and be prepared for a minimum two-year hold. Companies and investors should engage with the CMA or licensed advisers early if they believe an exemption or special approval is needed.

Why this matters for expatriates and foreign investors

For the Saudi expat community and international investors with Saudi exposure, these rules are important for three reasons:

• Portfolio planning: Expats holding Saudi-listed equities should review their positions and combined foreign ownership at the company level to ensure compliance with the 49% cap.
• Opportunities for strategic partners: Firms planning long-term operational investments in Saudi Arabia can seek strategic-investor status to exceed the 49% ceiling, provided they meet the two-year holding requirement.
• Regulatory certainty: The CMA’s reporting and swap-deal safeguards increase transparency and reduce execution risk for foreign investors.

Practical next steps for expatriates

If you are an expat investor or advising one, consider the following action list:

1. Review current holdings on the Saudi Exchange and confirm whether your total ownership is affected by the combined foreign cap.
2. Contact your broker or a CMA-licensed asset manager to verify whether your account classifies you as a QFI, client of a licensed firm, or another eligible category.
3. If you plan to increase an equity position, verify whether a 10% single-investor cap or the 49% combined cap will apply.
4. Strategic investors should prepare documentation showing long-term operational intent and be ready to meet the two-year minimum holding requirement.
5. Ensure all transactions comply with AML/KYC rules and that any swap deals are handled by licensed institutions.
6. Monitor CMA announcements and Tadawul disclosures for the periodic statistics the regulator will publish on foreign ownership.

Context: Vision 2030 and broader market reforms

These CMA reforms fit within Saudi Arabia’s broader Vision 2030 agenda to diversify the economy and attract foreign capital. The Kingdom has been gradually liberalizing foreign investment rules across sectors, streamlining procedures and improving market infrastructure to welcome long-term international partners.

Key official resources for tracking developments:

• Capital Market Authority (CMA) — official site
• Tadawul — Saudi Stock Exchange
• Ministry of Investment (MISA) — investor guidance
• Saudi Vision 2030

Final notes for the expat community

The new CMA rules bring clarity and predictable guardrails for foreign ownership of Saudi-listed companies. They balance openness with prudence, offering pathways for large institutional investors and strategic partners while protecting local market stability. As an expatriate investor — whether you're managing personal savings or working for an international asset manager — now is the time to review accounts, consult licensed advisers and ensure your holdings comply with the new limits.

For official guidance and the latest regulatory texts, consult the CMA’s website and engage a licensed local broker or legal adviser if you intend to make material changes to your Saudi market exposure.

Disclaimer: This article provides general information and does not constitute legal, tax or investment advice. Always consult authorised professionals before making investment decisions.